Advertising Metrics
This unit discusses seven popular advertising metrics that measure what you did, as well as where and how you spent your budget.
Marketing Metrics
Marketing metrics allow companies to measure the effectiveness of their campaigns.
Media planners use these seven metrics before a campaign. They also use them after a campaign for analytical purposes. The metrics remain part of the permanent record of the campaign.
They are navigational metrics. They can help you steer your program toward higher profitability but they can't help you measure your profitability (for that you need evaluative metrics). Here are the seven metrics:
- Reach is a measurement of the size of the audience to whom you will communicate.
- Frequency is the average number of times your ads will be shown to an individual or household.
- Gross Rating Points (GRPs) equal Reach times Frequency.
- Target Rating Points (TRPs) equal Gross Rating Points times the ratio of the specifically targeted audience to the total audience.
- Impressions equal the number of exposures of an ad or commercial to the people or households in your audience.
- Cost per Thousand (CPM) is the cost to reach 1,000 people or households.
- Cost per Point (CPP) is the cost to reach one percent of the audience.
The Relationship Between Reach and Frequency
Reach and frequency of exposure are also two of the most important statistics used in advertising management. When reach is multiplied by average frequency a composite measure called Gross Rating Points (GRPs) is obtained. Reach can be calculated indirectly as: reach = GRPs / average frequency.
Sometimes, reach and frequency are terms generally used when planning advertising campaigns. However, the concept of reach and frequency applies to any promotional activity you undertake: direct mail, direct selling, and even networking.
For example, an air conditioning repair service who has decided to do a direct mail piece has to decide whether to mail the entire Dallas / Fort Worth Metroplex once or to mail a quarter of the Metroplex four times. An attorney who receives many of her clients through networking may have to decide whether to attend one weekly networking meeting or four different monthly meetings.
When faced with decisions of reach vs. frequency, this rule of thumb is helpful to remember: Reach without Frequency = Wasted Money
Marketing is the process of building a business relationship with potential customers. Have you ever established a lifelong friendship with someone you had contact with only once? Probably not. Generally friendships (and all relationships for that matter) grow as a result of frequent contact over time. Even when the potential to form a great friendship is there at the first encounter, it is unlikely it will grow without nurturing.
Seth Godin in his book Permission Marketing uses an analogy of seeds and water to demonstrate the importance of assuring adequate frequency in your promotional campaigns. If you were given 100 seeds with enough water to water each seed once, would you plant all 100 seeds and water each one once? Or would you be more successful if you planted 25 seeds and used all of the water on those 25 seeds?
While intuitively and even conceptually we understand the importance of frequency to successful promotional and sales campaigns, somehow when it comes to actually implementing the campaign, we opt to sacrifice frequency for reach. And then we complain about the ineffectiveness of our promotional efforts. Undoubtedly one of the biggest wastes of marketing dollars is promotional activities that are implemented without adequate frequency.
When faced with the decision of mailing one direct mail piece to 10,000 people or mailing to 2,500 people four times think about the fate of those 100 seeds you can water only once. Unless you have water rights and can obtain additional water, opt for less reach and more frequency.